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The car, a rare and expensive good?

Valéry Mainjot
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August 28, 2024

The market had already fallen by 25.48% in 2020 compared to 2019, and did little better in 2021. Penalized by the semiconductor crisis following the pandemic, consumers are waiting to place orders before making purchasing decisions. This general wait-and-see attitude is not conducive to the recovery in the sector expected by manufacturers and employees alike.

Production impacted by the semiconductor crisis

The microelectronics sector was one of the first fields of activity to be largely globalised in research and production. It is therefore entirely subject to the vagaries of international demand.

The research cycle is particularly long and costly, and the production cycle requires a great deal of water, which is concentrated in Asia, mainly in Taiwan and South Korea.

However, the global Covid-19 pandemic brought several manufacturing plants to a halt, starting in the spring of 2020. The weather was particularly unfavourable, with a severe drought during the period.  

There is also a market effect. With the spread of teleworking and the increased number of hours spent at home, consumers have continued to consume electronic office and leisure products that allow them to work and play at home.

Also, semiconductor manufacturers have prioritised production for personal electronics rather than for the automotive sector.

Demand for cars has picked up again, but the automotive industry is consequently short of semiconductors, which are essential to a vehicle, from braking to steering to engine management. In two years, the market has plummeted by 555,275 units, a drop of 25%. You have to go back to 1975 to find a market this low.

The Renault group recorded the biggest drop, Stellantis hardly doing better and Citroën limited the breakage, while Dacia soared by 28.9%.

The forecast for 2022 is a small increase of 3.7% due to the continuing pandemic and problems with the supply of semiconductors. It will be necessary to be particularly vigilant and to keep a constant watch on developments in the situation.

Fear for jobs

It is now the consequences of significant sales declines that are likely to be a problem.

In the networks, sales bonuses are often only awarded on delivery of the vehicles, which means that salespeople are directly penalised by the difficulties in supplying and delivering to customers.

Despite the help of dealers, there is a real threat to employment.

This concern is heightened by the fact that it is difficult to assess when the semiconductor shortages will end and production will return to normal.

Increasingly expensive and therefore less and less accessible products

Reality can be measured. The median standard of living of French people has risen from an index of 100 to 108 between 2006 and 2020, while the selling price of new cars has risen from 100 to... 136. It takes more than 17 months of minimum wage to buy a new car on average, compared with 14.7 in 2010. Is the car becoming a luxury product again?

As a result, the purchase of new cars by individuals fell by 7.6%, despite the post-confinement recovery of the economy and consumption.

This weakness in the share of private individuals in new vehicles (since 2009 from 67% to 46% today) is shifting to second-hand vehicles, long-term leasers and company vehicles (+10% in 2021)

The automotive industry is continuing its transformation with ever greener models.

The transformations announced in the 2010s have become a reality: connectivity, autonomy, electrification, energy transition... Car manufacturers are no longer at the stage of promises, but are now expected to act.

Under the pressure of European regulations and national taxation, new registrations of 100% electric vehicles continued to take off with a 46.1% increase to reach a 9.8% market share (6.7% in 2020). The number of plug-in hybrids almost doubled, with an 88.9% increase and an 8.5% market share (4.5% in 2020).

The automobile industry is entering the third millennium at full speed. Between technological transformation and industrial disorganisation in the face of semiconductor shortages, the sector is suffering and becoming more fragile. As a result, what becomes rare becomes expensive, according to the well-known adage.